Unit Trust

Definition

An SEC-registered investment company which purchases a fixed, unmanaged portfolio of income-producing securities and then sells shares in the trust to investors. The major difference between a Unit Trust and a mutual fund is that a mutual fund is actively managed, while a unit investment trust is not managed at all. Capital gains, interest and dividend payments from the trust are passed on to shareholders at regular periods. If the trust is one that invests only in tax-free securities, then the income from the trust is also tax-free. A unit investment trust is generally considered a low-risk, low-return investment. Some investors prefer Unit Trusts to mutual funds because Unit Trusts typically incur lower annual operating expenses (since they are not buying and selling shares); however, Unit Trusts often have sales charges and entrance/exit fees. also called fixed investment trust or participating trust or Unit Investment Trust (UIT).

Use Unit Trust in a sentence

You should try and make sure that you do all of your research before you agree to enter a unit trust.

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It was a unit trust company and everyone was happy to be able to work with them and we really loved being a part of their company.

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We opted to become a unit trust when we looked at the options as they were explained to us. The returns we could reap seemed worth it.

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